Step 9 – Provide purposeful director induction

Nine Steps to Effective Governance

The importance of effective induction

All new board members should receive a formal induction into the board’s governance role and the organisation’s work as a whole. This is to ensure new members come up to speed and can contribute to the board’s work as soon as possible.

No director should accept a board position without prior knowledge of the organisation, the board, its members and its issues.

Board development workshop

Board development workshops are an excellent way to facilitate an induction and encourage teamwork. An outside facilitator is a good idea, and if resources permit, team profiling is a useful part of the workshop.

Succession planning

Each board should develop a succession plan for the selection and replacement of elected and appointed board members, and for office holders such as the chair.

Diversity

The board should have a clear policy on diversity that guides its recruitment.

It needs to reflect the community it serves and to ensure a diversity of thought around the table.

Modelling culture

The board sets, models and maintains oversight of organisational culture. A description of the desired culture should be provided to prospective directors.

Key elements in an effective induction process

The induction manual

The manual should include key information about the organisation, its work and its policies and procedures, and provide a reference for board members throughout their term.

Contents should include, but not be limited to:

the constitution
the strategic plan and summary statement of intent
a statement of organisational values
information about the organisation, for example, an organisational chart, contact details for fellow directors and key staff
current and recent meeting papers including the minutes and recent financial statements
the board charter containing governance policies
the board’s code of conduct
a glossary of definitions of terms used and acronyms
the current year’s meeting schedule
the board’s annual agenda (work programme).

Meetings with the chairman and chief executive

It is important for a new director to meet with the chair for a governance familiarisation. This is a time to discuss board protocols, ask questions about board processes and its history, and talk about crucial issues like potential conflicts of interest.

Time should be set aside for the new director to meet with the chief executive for an introduction to operational matters.

Mentors

An increasing number of boards use formal or informal mentors to guide new directors. The mentor should be matched to the director (in terms of interests, age, common business affiliations and common background experience). They might be a current board member (a ‘buddy director’) or an appropriate third party with expertise.

Acknowledging and managing conflicts of interest

Conflicts of interest that have the potential to bring the board or organisation into disrepute should be disclosed and managed to protect the integrity of the governance process.

Directors’ conflicts of interest are a common issue for boards.

Duty of care obligations and duty of loyalty require that directors don’t place their own interests ahead of those of the organisation.

Equally, directors must not use their directorships to directly benefit themselves, their families or others with whom they are closely associated.

While conflicts of interest are often unavoidable, it is usually the way they are handled, rather than their existence, that creates difficulties.

Each board should have a Conflicts of Interest policy describing the processes to be followed when conflicts are identified.

Every board should require its members to declare any conflicts of interest relating to their duties as board members.

Good directors are sensitive to possible conflicts and declare them without prompting. Processes for dealing with conflicts of interest should be robust, transparent and able to deal with actual or potential conflicts without creating embarrassment or impeding the board’s work.

A simple Conflicts of Interest policy is included in the online board charter.

An up-to-date register of interests serves as an open record of the interests brought to the boardroom by various board members. This is one way for the board to demonstrate openness and transparency.

Changes to the Incorporated Societies Act

Still in draft at the time of writing, the proposed revisions to the Act will have guidance on the management and visibility of conflicts of interests.